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HomeMy WebLinkAbout~Master - Special Meeting of the Ames City Council 06/16/2003MINUTES OF THE SPECIAL MEETING OF THE AMES CITY COUNCIL AMES, IOWA JUNE 16, 2003 The Ames City Council met in special session at 12:00 Noon on the 16th day of June, 2003, in the City Council Chambers in City Hall, 515 Clark Avenue, pursuant to law with Mayor Ted Tedesco presiding. Council members present were Russ Cross, Steve Goodhue, Judie Hoffman, Riad Mahayni, and Sharon Wirth. Council Member Vegge was absent. REVIEW OF ESTIMATED FINANCIAL IMPACT OF REINVENTING GOVERNMENT LEGISLATION AND HEALTH CARE COSTS: City Manager Steve Schainker advised that the Governor recently signed the “Reinventing Government” bill that eliminates an estimated $645,000 of annual state financial assistance to Ames beginning July 2003. Elimination of this important non-property tax revenue source in the General Fund took place after the City’s budget was certified to the state; therefore, there is no opportunity for the City to adjust the property tax rate to recoup the lost revenue in 2003/04. Mr. Schainker further advised that there are new projections that indicate the 12.5% increase included in the 2003/04 budget for health care costs will not be sufficient; there will be a need for an additional $70,497 in the coming year ($33,000 from the General Fund). The total amount of additional dollars that must be identified to balance the City’s 2003/04 General Fund budget is approximately $678,000. Mr. Schainker stated that the Police, Fire, Parks and Recreation, Library, and Planning Departments will feel the major impact of this financial predicament. According to Mr. Schainker, the funding cutback from the state is not a one-time occurrence, so budget adjustments totaling this same amount should be identified for future years as well. He said that it will be difficult to reduce this amount in the General Fund without seriously affecting existing services. STRATEGY FOR DEALING WITH THIS FINANCIAL CHALLENGE: Finance Director Duane Pitcher gave three scenarios to forecast property tax rates: (1) Scenario 1: “no changes in base services, revenue, or funding sources/continued payment of state replacement taxes to the City”; (2) Scenario 2: “no changes in base services, revenue, or funding sources/elimination of $645,000 in state replacement taxes to the City”; (3) Scenario 3: “change services revenue and funding sources as proposed for a net reduction of $645,000 in property tax requirement; elimination of $645,000 in state replacement taxes to the City.” He advised that if the state cuts are made and no budget changes were to occur (Scenario 2), it would result in a 4.34% increase in expenses; property taxes would need to increase by 11.79%. The City Council was told that staff agreed on the following criteria to be used to prioritize the current services and/or suggested budget adjustments. 1. Changes that minimize reductions in service to our customers 2. Services that limit risk to our community 3. Services where there is no existing alternative service provider 4. Programs that cannot be consolidated with other agencies 5. Services where there is a legal requirement to maintain 6. Services that protect life and safety 7. Services that promote quality of life 8. Services that help promote the Community Vision 9. Services that have maximized their fee support 10. Services that have citizen/customer support (e.g., Resident Satisfaction Survey) 11. Services with high Cost/Benefit - Number of people served - Total tax subsidy - Number of people served per dollar of subsidy - Tax subsidy per person served Based on these criteria, Mr. Schainker said his solution to the financial crisis involved a combination of four strategies: 1. Utilize additional General Fund balance where appropriate and where the use will not negatively impact the City’s financial credit rating (i.e., maintain a 20% balance). 2. Increase General Fund revenue by identifying new user fees or increasing existing fees 3. Shift funding support for a service from the General Fund to some other fund where appropriate. 4. Reduce expenses by eliminating a service. Emphasis was placed on those services that reflect a substantial subsidy level and/or are currently being offered by another entity. Mr. Schainker gave a summary of one-time budget adjustments that equaled $843,939 to address the anticipated shortfall in 2003/04. These included a $495,807 reduction in expenses, $208,710 in increased revenues, and $139,422 in revenue shifts. This total also included freezing three full-time-equivalency (FTE) positions and eliminating 1.5 FTE positions. The major fund shifts were then explained. Mayor Tedesco suggested that illegal parking fines be increased to match those charged by Iowa 2 State University. A summary of ongoing budget adjustments (for 2004/05 and beyond) was presented by Mr. Schainker. He described the suggested reductions in expenses of $313,879; the $226,470 increase in revenue, and the $267,633 in revenue shifts that would comprise the adjustments totaling $807,982. A correction to the table entitled “Reduction in Expenses” was pointed out by Mr. Schainker: Under Fire Safety Activities, the second item should read, “reduce maintenance costs on trucks” - $4,000. Mr. Schainker said that he strongly believes the continuation of many of the proposed one-time reductions in training, conferences, capital, wages, etc., should not be carried forward into the future because they would damage the long-term quality of our organization. Council Member Goodhue left the meeting at 12:52 p.m. The City Manager asked the City Council to review other budget considerations as follows: 1. Ask the Conference Board to pay for City legal services 2. Ask the Hospital Board to make a payment-in-lieu of tax payment to the City, similar to the City’s Electric Utility 3. Ask the Library Board to charge a $1 rental fee for DVDs and video tapes 4. Use a portion of the Hotel/Motel Tax receipts to fund the City’s auditorium 5. Reduce annual contributions to Human Service agencies 6. Reduce annual contributions to the Commission On The Arts (COTA) 7. Eliminate funding for Partner Cities program COUNCIL GOAL REGARDING CREATION OF BUDGET EVALUATION FRAMEWORK: The City Council was reminded that they had set a goal to identify and review all programs/services with subsidy levels. In response, City staff began a process during this year’s budget hearings to identify all of the City services that are subsidized with property taxes. The Council had been provided with a list of programs and services funded by the General Fund. They also had received examples of a suggested format to be used for an analysis of the programs and services. Mr. Schainker asked for the City Council’s approval of the format. Moved by Mahayni, seconded by Wirth, to confirm the budget evaluation framework, as suggested by staff. Vote on Motion: 4-0. Motion declared carried unanimously. 3 Council Member Cross suggested that costs be reviewed for expenses incurred by the City Council, specifically the National League of Cities and Congress of Cities Conferences. Mayor Tedesco suggested that the annual budget meetings convene at 6:00 p.m. and meals not be provided to the Council, staff, and/or press. Council Member Hoffman suggested that employees pay a higher co-pay for health insurance expenses. Mr. Schainker explained that there are many unionized employees; the increase would need to be negotiated. He also feels that the City of Ames is very comparable to other cities regarding health insurance benefits. Mr. Schainker asked the City Council to be ready to make decisions regarding budget adjustments at their meeting to be held on June 24. ADJOURNMENT: The meeting adjourned at 1:07 p.m. _____________________________ ________________________________ Diane Voss, City Clerk Ted Tedesco, Mayor 4